Goldman Sachs BDC Inc

Previous wording

We are a specialty finance company focused on lending to middle-market companies. We are a closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated as a regulated investment company (“RIC”), and we expect to qualify annually for tax treatment as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2013. From our formation in 2012 through June 30, 2024, we originated approximately $8.13 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche debt, including last-out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Current wording

We are a specialty finance company focused on lending to middle-market companies. We are a closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated as a regulated investment company (“RIC”), and we expect to qualify annually for tax treatment as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2013. From our formation in 2012 through September 30, 2024, we originated approximately $8.51 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche debt, including last-out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Previous wording

As of June 30, 2024, the total portfolio weighted average yield measured at amortized cost and fair value was 11.0% and 12.6%, as compared to 11.8% and 13.2% as of December 31, 2023. Within Second Lien/Senior Secured Debt, the increase in weighted average yield at cost and fair value was primarily driven by the restoration of MPI Engineered Technologies, LLC to accrual status. Within Unsecured Debt, the decrease in weighted average yield at cost and increase in fair value was primarily driven by the underperformance of Wine.com.

Current wording

As of September 30, 2024, the total portfolio weighted average yield measured at amortized cost and fair value was 10.9% and 13.3%, as compared to 11.8% and 13.2% as of December 31, 2023. Within Second Lien/Senior Secured Debt, the increase in weighted average yield at cost and fair value was primarily driven by the restoration of MPI Engineering Technologies, LLC to accrual status. Within Unsecured Debt, the decrease in weighted average yield at cost and fair value was primarily driven by the underperformance of Wine.com and the sale of Zodiac Intermediate, LLC (dba Zipari), a first lien debt investment, to mPulse Mobile, Inc. (dba Zipari Inc.), a non-income producing security.

Previous wording

Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount. As of June 30, 2024 and December 31, 2023, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 27.8% and 42.9% of total debt investments.

Current wording

Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount. As of September 30, 2024 and December 31, 2023, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 24.9% and 42.9% of total debt investments.

Previous wording

The increase in investments with a grade 1 investment performance rating was driven by investments with an aggregate fair value of $58.44 million being upgraded from grade 2 investment performance rating to grade 1 investment performance rating due to potential exits, partially offset by the exit of investments with an aggregate fair value of $46.81 million. The decrease in investments with a grade 3 investment performance rating was primarily driven by an investment with a fair value of $49.09 million being downgraded to grade 4 performance rating due to financial underperformance, and an investment with a fair value of $30.01 million being upgraded to grade 2 performance rating due to improved performance. The increase in investments with grade 4 investment performance rating was primarily driven by investments with an aggregate fair value of $86.36 million being downgraded from grade 3 investment performance rating and grade 2 investment performance rating due to underperformance, partially offset by investments with an aggregate fair value of $41.83 million being upgraded to grade 3 investment rating due to improved performance and restructuring.

Current wording

The decrease in investments with a Grade 1 investment performance rating was driven by the exit of investments with an aggregate fair value of $46.81 million, partially offset by investments with an aggregate fair value of $19.81 million being upgraded from a Grade 2 investment performance rating to a Grade 1 investment performance rating due to potential exits.

Previous wording

Interest income from investments decreased from $102.48 million for the three months ended June 30, 2023 to $95.19 million for the three months ended June 30, 2024, primarily due to the investments being placed on non-accrual status as a result of underperformance during the quarter. Included in interest income is accelerated accretion of upfront loan origination fees and unamortized discounts of $0.39 million for the three months ended June 30, 2023, and $2.80 million for the three months ended June 30, 2024.

Current wording

Interest income from investments decreased from $109.71 million and $310.83 million for the three and nine months ended September 30, 2023 to $99.14 million and $291.89 million for the three and nine months ended September 30, 2024, primarily due to investments being placed on non-accrual status as a result of underperformance, as well as a decline in base interest rates.

Previous wording

PIK income from investments increased from $8.79 million and $16.55 million for the three and six months ended June 30, 2023 to $11.86 million and $24.56 million for the three and six months ended June 30, 2024. The increase was due to the increase in the number of investments earning PIK income, which includes the impact of restructuring of certain investments.

Current wording

PIK income from investments increased from $25.83 million for the nine months ended September 30, 2023 to $34.54 million for the nine months ended September 30, 2024. The increase was due to the increase in the number of investments earning PIK income.

Previous wording

Interest and other debt expenses increased from $27.78 million and $55.04 million for the three and six months ended June 30, 2023 to $29.10 million and $56.72 million for the three and six months ended June 30, 2024. The increase was primarily driven by higher amortization of deferred financing and debt issuance costs due to the issuance of the 2027 Notes and the Revolving Credit Facility amendment.

Current wording

Interest and other debt expenses increased from $28.17 million and $83.21 million for the three and nine months ended September 30, 2023 to $29.30 million and $86.02 million for the three and nine months ended September 30, 2024. The increase was primarily driven by higher amortization of deferred financing and debt issuance costs due to the issuance of the 2027 Notes and the Revolving Credit Facility amendment.

Previous wording

Incentive fees decreased from $7.84 million and $30.14 million for the three and six months ended June 30, 2023 to $0 million and $10.88 million for the three and six months ended June 30, 2024. The decrease was driven by the performance of the investment portfolio for the twelve quarters ended June 30, 2024 as compared to the twelve quarters ended June 30, 2023. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Current wording

Incentive fees decreased from $6.24 million and $36.38 million for the three and nine months ended September 30, 2023 to $0 million and $10.88 million for the three and nine months ended September 30, 2024. The decrease was driven by the performance of the investment portfolio for the twelve quarters ended September 30, 2024 as compared to the twelve quarters ended September 30, 2023. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Previous wording

For the three and six months ended June 30, 2023, our Investment Adviser voluntarily waived incentive fees of $0 million and $1.99 million. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Current wording

For the nine months ended September 30, 2023, our Investment Adviser voluntarily waived incentive fees of $1.99 million and management fees of $0 million. For additional information, see Note 3 “Significant Agreements and Related Party Transactions” in our consolidated financial statements included in this report.

Previous wording

For the six months ended June 30, 2024, net realized losses were primarily driven by our investments in two portfolio companies. In June 2024, the restructuring of the first lien debt investments in Thrasio, LLC resulted in a realized loss of $26.51 million. In addition, in March 2024, the restructuring of the first lien debt investments in Sweep Purchaser LLC resulted in a realized loss of $17.49 million.

Current wording

For the nine months ended September 30, 2024, net realized losses were primarily driven by our investments in four portfolio companies. In the third quarter of 2024, the restructuring of the first lien debt investments in Pluralsight, Inc. and the sale of Zodiac Intermediate, LLC (dba Zipari) to mPulse Mobile, Inc. (dba Zipari Inc.) resulted in a realized loss of $43.25 million and $41.23 million. In June 2024, the restructuring of the first lien debt investments in Thrasio, LLC resulted in a realized loss of $26.51 million. In March 2024, the restructuring of the first lien debt investments in Sweep Purchaser LLC resulted in a realized loss of $17.49 million.

Previous wording

For the six months ended June 30, 2023, net realized losses were primarily driven by the exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, which resulted in a realized loss of $36.27 million.

Current wording

For the nine months ended September 30, 2023, net realized losses were primarily driven by the exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, which resulted in a realized loss of $36.27 million.

Previous wording

For the three and six months ended June 30, 2024, Other, net includes gross unrealized appreciation of $13.54 million and $27.13 million, and gross unrealized depreciation of $(12.69) million and $(17.54) million.

Current wording

For the three and nine months ended September 30, 2024, Other, net includes gross unrealized appreciation of $4.72 million and $26.28 million, and gross unrealized depreciation of $(9.68) million and $(16.94) million.

Previous wording

Net change in unrealized appreciation (depreciation) in our investments for the six months ended June 30, 2024 was primarily driven by the financial underperformance of Lithium Technologies, Inc, Pluralsight, Inc, Zodiac Intermediate, LLC (dba Zipari) and Wine.com, Inc., and was partially offset by the reversal of unrealized depreciation in connection with the aforementioned restructuring of the first lien debt investments in Thrasio, LLC and Sweep Purchaser LLC.

Current wording

Net change in unrealized appreciation (depreciation) in our investments for the nine months ended September 30, 2024 was primarily driven by the financial underperformance of Lithium Technologies, Inc., Wine.com, Inc. and Hollander Intermediate LLC (dba Bedding Acquisition, LLC), partially offset by the reversal of unrealized depreciation in connection with the sale of Zodiac Intermediate, LLC (dba Zipari) to mPulse Mobile, Inc. (dba Zipari Inc.), in addition to the restructuring of investments in Thrasio, LLC and Sweep Purchaser LLC.

Previous wording

For the three and six months ended June 30, 2023, Other, net includes gross unrealized appreciation of $10.46 million and $10.83 million, and gross unrealized depreciation of $(6.08) million and $(12.87) million.

Current wording

For the three and nine months ended September 30, 2023, Other, net includes gross unrealized appreciation of $5.10 million and $10.64 million, and gross unrealized depreciation of $(8.51) million and $(12.77) million.

Previous wording

Net change in unrealized appreciation (depreciation) in our investments for the six months ended June 30, 2023 was primarily driven by the reversal of unrealized depreciation in connection with the aforementioned exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC, partially offset by the unrealized depreciation resulting from the increase in market volatility.

Current wording

Net change in unrealized appreciation (depreciation) in our investments for the nine months ended September 30, 2023 was primarily driven by the reversal of unrealized depreciation in connection with the aforementioned exit of our second lien debt investment and common stock investment in National Spine and Pain Centers, LLC and the recapitalization of our second lien debt investment in Zep Inc., partially offset by the financial underperformance of Thrasio, LLC and Zodiac Intermediate, LLC (dba Zipari) and the increase in market volatility.

Previous wording

We expect to generate cash primarily from the net proceeds of any future offerings of securities, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into credit facilities in addition to our existing credit facilities, as discussed below, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 150% after such borrowing (if certain requirements are met). See “—Key Components of Operations—Leverage.” As of June 30, 2024 and December 31, 2023, our asset coverage ratio based on the aggregate amount outstanding of our senior securities was 181% and 187%. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

Current wording

We expect to generate cash primarily from the net proceeds of any future offerings of securities, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our stockholders, we may enter into credit facilities in addition to our existing credit facilities, as discussed below, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 150% after such borrowing (if certain requirements are met). See “—Key Components of Operations—Leverage.” As of September 30, 2024 and December 31, 2023, our asset coverage ratio based on the aggregate amount outstanding of our senior securities was 183% and 187%. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

Previous wording

All correspondence concerning the plan should be directed to the plan agent at Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078, with overnight correspondence being directed to the plan agent at Computershare Trust Company, N.A., 150 Royall St., Suite 101, Canton, MA 02021; by calling 855-807-2742; or through the plan agent’s website at www.computershare.com/investor. Participants who hold their shares through a broker or other nominee should direct correspondence or questions concerning the DRIP to their broker or nominee.

Current wording

All correspondence concerning the plan should be directed to the plan agent at Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078, with overnight correspondence being directed to the plan agent at Computershare Trust Company, N.A., 150 Royall St., Suite 101, Canton, MA 02021; by calling 855-807-2742; or through the plan agent’s website at www.computershare.com/investor.

Previous wording

We may borrow amounts in USD or certain other permitted currencies. Debt outstanding denominated in currencies other than USD has been converted to USD using the applicable foreign currency exchange rate as of the applicable reporting date. As of June 30, 2024, we had outstanding borrowings denominated in USD of $597.67 million, in Euros (EUR) of 0 million, in British Pounds (GBP) of 28.75 million and Canadian Dollars (CAD) of 83.52 million.

Current wording

We may borrow amounts in USD or certain other permitted currencies. Debt outstanding denominated in currencies other than USD has been converted to USD using the applicable foreign currency exchange rate as of the applicable reporting date. As of September 30, 2024, we had outstanding borrowings denominated in U.S. Dollars ("$" or "USD") of $524.67 million, in Euros ("EUR") of EUR of 0 million, in Great British Pounds ("GBP") of GBP 30.95 million and Canadian Dollars ("CAD") of CAD 83.52 million.

Previous wording

On February 10, 2020, we closed an offering of $360.00 million aggregate principal amount of 3.75% unsecured notes due 2025. The 2025 Notes were issued pursuant to an indenture between us and Computershare Trust Company, National Association, as Trustee (as successor to Wells Fargo Bank, National Association (“Wells Fargo”)). The 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually in arrears on February 10 and August 10 of each year. The 2025 Notes will mature on February 10, 2025 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the indenture. For further details, see Note 6 “Debt—2025 Notes” to our consolidated financial statements included in this report.

Current wording

On February 10, 2020, we closed an offering of $360.00 million aggregate principal amount of 3.75% unsecured notes due 2025. The 2025 Notes were issued pursuant to an indenture between us and Computershare Trust Company, National Association, as Trustee (as successor to Wells Fargo Bank, National Association (“Wells Fargo”)). The 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually in arrearson February 10 and August 10 of each year. The 2025 Notes will mature on February 10, 2025 and may be redeemed in whole or in part at our option at any time or from time to time at the redemption prices set forth in the indenture. For further details, see Note 6 “Debt—2025 Notes” to our consolidated financial statements included in this report.

Previous wording

For a description of our critical accounting policies, see Note 2 “Significant Accounting Policies” to our consolidated financial statements included in this report. We consider the most significant accounting policies to be those related to our Investments, Revenue Recognition, Non-Accrual Investments, Distributions, and Income Taxes.

Current wording

For a description of our critical accounting policies, see Note 2 “Significant Accounting Policies” to our consolidated financial statements included in this report. We consider the most significant accounting policies to be those related to our Investments, Revenue Recognition, Non-Accrual Investments, Distributions, and Income Taxes. We consider the most significant critical estimate to be the fair value measurement of investments. The critical accounting policies and estimate should be read in connection with our risk factors listed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2023.

Previous wording

On August 8, 2024, our Board of Directors declared a quarterly distribution of $0.45 per share payable on October 28, 2024 to holders of record as of September 30, 2024.

Current wording

On November 7, 2024, the Board of Directors declared a quarterly distribution of $0.45 per share payable on January 27, 2025 to holders of record as of December 31, 2024.